2011: Yahoo fires CEO Carol Bartz

Yahoo's (YHOO) board abruptly fired pugnacious chief executive Carol Bartz on Tuesday, ousting the most prominent female CEO in Silicon Valley after growing impatient with her struggle to turn around the pioneering but troubled Internet company.

In a statement released late in the day, Yahoo chairman Roy Bostock said Chief Financial Officer Timothy Morse would serve as interim CEO. But the board gave little indication of its plans for the future, despite recurring speculation about a sale or restructuring.

Bartz was characteristically blunt in an email sent to employees Tuesday: "I am very sad to tell you that I've just been fired over the phone by Yahoo's chairman of the board," she wrote, according to several accounts. "It has been my pleasure to work with all of you and I wish you only the best going forward."

The 63-year-old Bartz was hired less than three years ago to replace co-founder Jerry Yang, who served as CEO through a tumultuous period in which the company's stock plummeted as it fought off a takeover attempt by Microsoft and a threatened proxy battle by corporate raider Carl Icahn.

Bartz, who had a strong track record as CEO of the Marin County software company Autodesk, was widely viewed as a potential savior for Yahoo, which had lost search market share in recent years. But critics soured on her slow progress at turning the company around.

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"She sold herself as this results-oriented person and she was not," said investor Eric Jackson of Ironfire Capital, who had publicly called for Bartz's ouster earlier this year. He added Tuesday that he felt Bartz failed to grasp the complexities of the Internet industry, while alienating many people inside the company and out.

In her defense, Bostock and others had frequently said Bartz faced a tall order in reversing Yahoo's slide, as newer companies like Google (GOOG) and Facebook overtook Yahoo in the Internet pecking order. Yahoo's online sites for news, sports and entertainment are still highly popular, but the company's advertising revenue has declined and it has struggled with business partners.

Bostock thanked Bartz on Tuesday "for her service to Yahoo during a critical time of transition in the company's history, and against a very challenging macro-economic backdrop."

He also struck an optimistic note, promising that Yahoo's board "sees enormous growth opportunities" and adding, "we are committed to exploring and evaluating possibilities" that will provide growth and "deliver value to shareholders."

"The bottom line is that while Carol Bartz's removal is a positive for Yahoo, this remains a company with significant structural problems," wrote Macquarie Capital's Ben Schachter in a report Tuesday night. He added: "We think it is near certain that Yahoo will undergo significant changes" over the coming year.

Yahoo has been the subject of several reports about possible takeover bids by other companies. Jackson, for his part, said he is hoping the board will consider spinning off Yahoo's more lucrative Asian operations into separate entities. But the board's statement on Tuesday gave no hint of any specific options the company may be considering.

While the board searches for a permanent CEO, the company said a council of top executives including co-founders Yang and David Filo would advise Morse on running day-to-day operations.

Morse, 42, was hired by Bartz in July 2009 after previously serving as CFO at the San Jose chip company Altera and before that at General Electric Plastics. Although he also was an Internet outsider, analysts have generally praised Morse's performance.

Bartz, however, has not endeared herself to Wall Street or many inside the company. The veteran executive was known for using salty language to punctuate her often blunt assessments. Bartz oversaw layoffs during her first year on the job and sold several segments of Yahoo's business, including its HotJobs employment listings service.

"She really burned a lot of bridges during the first six to 12 months of her tenure," said Jackson.

She also presided over a deal with Microsoft to use its Bing search engine and share the proceeds of its search advertising. But she was unable to turn around a revenue decline or an exodus of top executives and engineers, and she repeatedly found herself asking Wall Street investors and analysts to give the company more time.

Earlier this year, she found herself scrambling to reassure investors that Yahoo would recover its investment in the Chinese Internet firm Alibaba after the latter company disclosed that it had spun off its lucrative online payments service, Alipay.

In its most recent quarterly earnings report, Yahoo reported revenue of $1.1 billion, down 5 percent from the previous year. Google's revenue surged by 36 percent in the same quarter.

Bartz was also unsuccessful in reviving Yahoo's stock: Shares in the company closed at $12.22 on Jan. 12, 2009, the day before her hiring was announced. The stock closed Tuesday at $12.91, though it shot up more than 6 percent in late trading after the news was announced.

The company's performance sparked criticism of Bartz's rich pay package, which reached $39 million in 2009. Her total compensation fell to $11.9 million in 2010, after the company's stock failed to meet goals spelled out in her contract.

In recent years, Bartz has been the only female CEO at a major Silicon Valley corporation and one of just a handful in the top job at the nation's largest companies. Other prominent women executives in tech include Xerox CEO Ursula Burns, Oracle (ORCL) co-president Safra Catz and Facebook chief operating officer Sheryl Sandberg.